ACIT, Meerut V. M/s Vaibhav Kumar (AOP), Meerut

ITA 4382/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90931 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 16-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 13-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P CHANDREKAR
• Keywords: Unexplained cash credit
• Section: 143(3); 142(1); 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : H : NEW DELHI BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SH. INTURI RAMA RAO , ACCOUNTANT MEMBER ITA NO. 4382 /DEL/ 2012 ASSESSMENT YEAR: 2009 - 10 ASSISTANT COMMISSIONER OF VS. M/S VAIBHAV KUMAR (AOP) INCOME TAX, CIRCLE - 2, MEERUT C - 37, PANDAV NAGAR, MEERUT (PAN: AAHFV5433B ) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. J.P. CHANDREKAR, DR RESPONDEN T BY: SH. SANDEEP SAPRA, ADV. DATE OF HEARING: 16.04.2015 DATE OF PRONOUNCEMENT: 22.04.2015 ORDER PER INTURI RAMA RAO : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED CIT(A), DATED 10.05.2012, PASSED FOR THE ASSESSMENT YEAR 2009 - 10 RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX APPEALS) HAS ERRED IN LAW IN DELET ING THE ADDITION OF RS. 32,21,6621 - MADE BY THE AO. U/S 6 OF IT ACT, 1961 ON A/C OF UNEXPLAINED CREDIT IN THE FORM OF MEMBER'S CAPITAL IGNORING THAT THEIR CREDITWORTHINESS WAS DISPROVED BEFORE THE A.O. DURING ASSESSMENT PROCEEDINGS AS THE LAND HOLDINGS OF MEMBERS WERE HIGHLY INSUFFICIENT AND MOREOVER, THEY WERE ALREADY IN HEAVY DEBTS AS REFLECTED FROM ENDORSEMENTS MADE ON THEIR 'KHATAUNIES' RELIANCE IS PLACE ON FOLLOWING CASE LAWS: - (I) CIT VIS KORLAY TRADING CO. LTD. (CAL.) 232 ITR 820. 2 ITA NO. 4382/DEL/2012 AY : 2009 - 10 (II) KRISHAN KUMAR JHANB VS ITO AND ANR ( PUNJAB & HARYANA) 17 DTR 249 (III) M/S SEJAI INTERNATIONAL LTD. VS. CIT MEERUT ( ALL.) APPEAL NO 306 OF 2010. (IV) CIT VS. DURGA PRASAD MORE, 82 ITR 540(SC) CIT VSP. MOHNAKALA, 291 ITR 278 (SC) (V) CIT VS. SUMATI DAYAL, 214,ITR 801 (SC) (VI) ITO VS. DIZ A HOLDINGS (P) LTD. 255 ITR 573(KERLA) (VII) BLOWELL AUTO(P) LTD. VS. ACIT(P &H) 11 DTR 91 2) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW IN DELETING THE ADDITION OF RS. 32,21,662/ - MADE BY THE AO U/S 68 OF THE IT ACT'61 ON A/C OF UNEXPLAINED CREDIT IN THE FORM OF MEMBER'S CAPITAL HOLDING THAT CONTRIBUTION WAS MADE BEFORE COMMENCEMENT OF BUSINESS WITHOUT VERIFYING THE FACTS FROM THE RECORDS WHERE NO SUCH CLAIM OR EVIDENCE EXIST. 3) WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN FACTS IN DELETING THE ADDITION OF RS. 32,21,662/ - MADE BY THE A.O. U/S 68 OF IT ACT, 1961 ON A/C OF UNEXPLAINED CREDIT IN THE FORM OF MEMBER' S CAPITAL BY HOLDIN G THAT MEMBERS CONTRIBUTIONS HAVE ERRONEOUSLY BEEN ARRIVED AFTER ADDING SHARE PROFIT OF RS. 2,17,701/ - OF THE YEAR BUT IGNORING THE WITHDRAWALS OF RS. 20,13,000/ - OF MEMBERS WHICH RATHER RESULTED IN SHORT ADDITION OF RS. 17,95,300/ - AND IN ANY CASE, AN ARI THMETICAL ERROR IN WORKING OUT THE UNEXPLAINED SUM COULD NOT BE A VALID GROUND FOR DELETION OF ENTIRE SUCH ADDITION. 4) THAT THE APPELLANT CRAVES LEAVE TO ADD, MODIFY AND/OR DELETE ANY GROUNDS OF APPEAL. 5) IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. RESTORED. 2. THE FACTUAL MATRIX OF THE CASE LEADING TO THE PRESENT APPEAL IS THAT THE RESPONDENT ASSESSEE IS AN AOP AND ENGAGED IN THE BUSINESS OF CONTRACT OF TOLL TAX COLLECTION. FOR THE ASSESSMENT YEAR 2009 - 10, THE RESPONDENT ASSESSEE FILED RETURN OF INCOME ON 27 TH SEPTEMBER, 2009 DECLARING INCOME OF RS. 2,17,701/ - . AFTER PROCESSING OF RETURN UNDER THE PROVISIONS OF SECTION 143(1) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) , THE CASE WAS SELECTED FOR SCRUTINY THROUGH CASS BY ISSUING NOTICE UNDER SECTION 142(1) OF THE ACT. THE ASSESSMENT WAS 3 ITA NO. 4382/DEL/2012 AY : 2009 - 10 FINALLY COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 22 ND DECEMBER, 2011 BY THE ASSISTANT COMMISSIONER OF INCOM E TAX, CIRCLE - 2, MEERUT, AT A TOTAL INCOME OF RS. 34,39,360/ - . THE DISPARITY BETWEEN THE RETURNED INCOME AND THE ASSESSED INCOME IS ON ACCOUNT OF THE ADDITION OF RS. 32,21,662/ - MADE UNDER SECTION 68 OF THE ACT AS UNEXPLAINED CASH CREDITS RECEIVED FRO M THE FOLLOWING MEMBERS OF RESPONDENT ASSESSEE AOP AS CAPITAL CONTRIBUTION: (I) SHRI PRAMOD KUMAR RS. 2,89,867.08 (II) SHRI RAVINDRA KUMAR RS. 2,88,593.09 (III) SHRI VAIBHAV KUMAR RS. 3,20,281.10 (IV) SHRI VINAY KUMAR RS. 2,79,208.04 (V) SHRI ARVIND SHARMA RS. 2,79,208.04 (VI) SHRI KRISHAN PAL SINGH RS. 2,92,270.10 (VII) SHRI RAHUL DEV RS. 2,92,270.10 (VIII) SHRI RAJVIR SINGH RS. 3,07,509.17 (IX) SHRI SUBODH KUMAR RS. 2,87,916.08 (X) SHRI SUBODH TYAGI RS. 2,92,270.10 (XI) ANITA SINGH RS. 2,92,2 70.10 TOTAL RS. 32,21,662/ - 3. THE ABOVE AMOUNTS WERE ADDED BY HOLDING THAT THE RESPONDENT ASSESSEE HAD NOT DISCHARGED THE ONUS LYING ON HIM IN RESPECT OF CAPACITY AND CREDITWORTHINESS OF THE DEPOSITORS. HE FURTHER NOTED THAT THE AMOUNTS WERE INTRODUCE D IN CASH. THE ASSESSING OFFICER ALSO RECORDED THE STATEMENTS OF 8 PERSONS ON OATH WHO CONFIRMED THE FACTUM OF CONTRIBUTION OF THE ABOVE CAPITAL TO THE AOP. STILL DISBELIEVING ON THE VERSIONS OF THE CONTRIBUTORS/DEPOSITORS, THE ASSESSING OFFICER BROUGHT THIS AMOUNT TO TAX. AGGRIEVED BY THIS ORDER OF ASSESSMENT, THE RESPONDENT ASSESSEE PREFERRED AN APPEAL BEFORE THE LEARNED 4 ITA NO. 4382/DEL/2012 AY : 2009 - 10 CIT(A), MEERUT, WHO VIDE ORDER DATED 10 TH MAY, 2012, ALLOWED THE APPEAL BY HOLDING THAT THE RESPONDENT ASSESSEE HAD DISCHARGED THE ONUS THAT LYING ON HIM BY FURNISHING THE AFFIDAVITS, IDENTITY AND BANK STATEMENTS ETC. OF THE DEPOSITORS TAKING INTO ACCOUNT THE FACT THAT THE AMOUNTS WERE INTRO DUCED WELL BEFORE THE COMMENCEMENT OF BUSINESS OF THE RESPONDENT ASSESSEE . AGGRIEVED BY THIS FINDING, THE REVENUE HAS COME UP WITH THE PRESENT APPEAL BEFORE US. 4. IT WAS ARGUED ON BEHALF OF THE LEARNED DR THAT THE AMOUNTS WERE INTRODUCED IN ODD FIGURES AND PAISA , RAISING SUSPICION ABOUT THE GENUINENESS OF THE TRANSACTION. HE FURTHER ARGUED THAT THE DEPOSITORS HAVE NO SUBSTANTIAL SOURCE OF INCOME TO DEPOSIT SO MUCH MONEY WITH THE RESPONDENT ASSESSEE S BANK ACCOUNT AND THEREFORE, THE LEARNED CIT(A) OUGHT NOT TO HAVE DELETED THE ADDITION. 5. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE VERY APPROACH OF THE ASSESSING OFFICER IN ADOPTING THE FIGURES IS ERRONEOUS, INASMUCH AS, HE ADOPTED THE CLOSING BALANCE STANDING TO THE CRE DIT OF THE RESPECTIVE MEMBERS AT THE END OF THE ACCOUNTING YEAR WHICH INCLUDES THE SHARE OF THE PROFIT CREDITED TO THE RESPECTIVE PARTNERS ACCOUNT. IT WAS ONLY ON ACCOUNT OF SHARE OF PROFIT CREDITED, THE AMOUNTS WERE IN PAISA AND THE AMOUNTS WERE NEVER INTRODUCED IN PAISA. THE RESPONDENT ASSESSEE HAD DISCHARGED THE ONUS THAT IS LYING UPON HIM, INASMUCH AS, HE HAS FILED THE DETAILS OF PROOF OF ADDRESS, IDENTITIES, PERMANENT ACCOUNT NUMBERS AND COPIES OF THE BANK ACCOUNT AND PROOF OF THE AGRICULTURAL INCOM E AS PROOF OF GENUINENESS, CREDITWORTHINESS AND 5 ITA NO. 4382/DEL/2012 AY : 2009 - 10 IDENTITY OF ALL THE DEPOSITORS. THERE WAS NO GRO UND ON WHICH THE LEARNED CIT(A) S ORDER CAN BE INTERFERED BY THIS TRIBUNAL. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIAL AV AILABLE ON RECORD. WE FIND FROM THE ASSESSMENT ORDER THAT DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER HAD EXAMINED 8 MEMBERS OUT OF 11 MEMBERS , REST OF 3 PEOPLES FILED AFFIDAVIT WHO CONTRIBUTED THE CAPITAL TO THE RESPONDENT ASSESSEE. IT IS UNDISPUTED FACTS THAT ALL OF THEM HA VE CONFIRMED HAVING CONTRIBUTED THE MONEY IN CASH, SOURCE OF INVESTMENT WERE ALSO EXPLAINED AND THE CONFIRMATION LETTERS HAVE ALSO BEEN FILED . UNDISPUTEDLY , THE AMOUNTS INTRODUCED IN CASH , T HIS IN OUR OPINION, BY ITSELF WILL NOT CONCLUDE THAT THE CREDITS WERE NOT GENUINE SPECIALLY IN THE LIGHT OF THE FACT THAT THERE IS NO BAR UNDER THE PROVISIONS OF INCOME - TAX ACT TO INTRODUCE CASH AS CAPITAL CONTRIBUTION. EVEN OTHERWISE, IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE RESPONDENT ASSESSEE SHOULD BE PROCEEDED AGAINST FOR VIOLATION OF ANY SUCH LAW. WE FIND FROM THE RECORD THAT THE CREDITORS HAVE FILED CONFIRMATION LETTERS AND COPIES OF RETURNS OF INCOME. THE ASSESSING OFFICER EVEN EXAMINED 8 MEMBERS OUT OF 11 MEM BERS OF THE AOP WHO CONFIRMED THE FACTUM OF CONTRIBUTION. THUS, THE RESPONDENT ASSSESSEE HAD DISCHARGED THE ONUS THAT LYING UPON HIM THEREBY SHIFTING THE BURDEN ON THE REVENUE. THE ASSESSING OFFICER COULD NOT DISPLACE THE EVIDENCE PLACED BY THE RESPONDENT ASSESSEE THEREBY THE CONTENTS OF THE CONFIRMATION LETTERS REMAINED UNCONTROVERTED. IT IS TRITE LAW THAT ONCE THE ASSESSE E DISCHARGES THE INITIAL BURDEN, THE BURDEN SHIFTS TO THE REVENUE UNLESS 6 ITA NO. 4382/DEL/2012 AY : 2009 - 10 THE REVENUE REBUTS THE CONFIRMATION LETTERS, THE CONFIRMATION S HOULD BE ACCEPTED. WE FURTHER NOTE THAT THE AMOUNTS IN QUESTION WERE INTRODUCED WELL BEFORE THE COMMENCEMENT OF BUSINESS OF THE RESPONDENT ASSESSEE THEREBY LEADIN G TO OBVIOUS INFERENCE THAT THEY CAN BE CONSIDERED ONLY IN WHOSE NAMES THE AMOUNTS ARE INTRODU CED. WE REFER IN THIS REGARD THE DECISIONS OF THE HON BLE ALLAHABAD HIGH COURT IN THE CASE S OF INDIAN RICE MILLS VS. CIT, 218 ITR 508 (ALL.) AND SURENDRA MOHAN SETH VS. CIT, 221 ITR 239 (ALL.) AND ALSO THE HON BLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF BHUPINDER FOOD AND MALT INDUSTRIES VS. CIT, 229 ITR 496. WE ALSO FAIL TO UNDERSTAND AS TO WHY THE ASSESSING OFFICER MADE ADDITION I N RESPECT OF 8 MEMBERS WHEN THEY CONFIRMED THE FACTUM OF CONTRIBUTION ON OATH BEFORE HIM. WHEN THE ASSESSEE DISCHARGES INITIAL ONUS OF ESTABLISHING IDENTITY AND ABILITY OF THE CREDITORS TO ADVANCE THE MONEY AND THE GENUINENESS OF THE TRANSACTION, IT WOULD BE FOR THE DEPARTMENT TO DISPROVE THE SAME. THE ASSESSEE BY PROVING THESE FACTS DISCHARGED THE BUR DEN LYING ON HIM BUT DOES NOT PREVENT THE ASSESSING OFFICER FROM PROBING FURTHER INTO THE MATTER AND INVESTIGATE THE CASE ON THE MATERIAL AVAILABLE AND THEN GIVE A FINDING AS TO THE GENUINENESS OF THE TRANSACTION. WITHOUT UNDERTAKING THIS EXERCISE, IT IS N OT OPEN TO THE ASSESSING OFFICER TO ARBITRARILY OR SUMMARILY REJECT THE EXPLANATION OF THE ASSESSEE. IN THE PRESENT CASE, THE ASSESSING OFFICER HAD NOT CHOSEN TO PROBE THE MATTER FURTHER AND INSTEAD HAD SUMMARILY REJECTED THE EXPLANATION OF THE RESPONDENT ASSESSEE. THEREFORE, WE ARE OF THE CONSIDERED 7 ITA NO. 4382/DEL/2012 AY : 2009 - 10 OPINION THAT THE LEARNED CIT(A) HAS PASSED A VERY REASONED ORDER AND WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). 7. THE GROUND NO. 3 RAISED BY THE REVENUE DOES NOT EMANATE FR OM THE ORDERS OF LEARNED CIT(A) OR FROM ASSESSING OFFICER, NOR THE DEPARTMENT HAD FILED ANY APPLICATION FOR ADMISSION OF THIS GROUND OF APPEAL, AS SUCH, WE DISMISS GROUND NO. 3. 8. HENCE, THE GROUNDS OF APPEAL FILED BY THE REVENUE ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 22 ND APRIL , 2015. SD/ - SD/ - ( DIVA SINGH ) ( INTURI RAMA RAO ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 22 ND APRIL , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI